Digitalization in the banking sector: Russian practices

The penetration of digitalization into the banking sector poses many questions for managers and owners of banks, it challenges experts and researchers. The study examines the main directions and effects of digitalization in the banking business. The focus is put on the relationship between the level of digitalization of banks and such indicators of their activities as the size of loans, deposits, return on equity and, in addition, metrics designed to measure the customer base of banks. The purpose of the work is to develop a methodological approach to assessing the above-mentioned relationship, as well as to test the hypothesis, which consists in the fact that there is no relationship between the level of digitalization of banks and the indicators of their activities mentioned above. The object of our study in the broad sense is the national banking system as a field for the implementation of digital solutions and innovations and adopting competitive strategies. In a narrow sense, we examine a sample of the 20 Russian credit institutions most advanced in terms of digitalization. The companies for the study have been chosen based on expert assessments and stratified selection, which assumes that the objects share certain uniform properties for comparison. In accordance with the objectives, ranking methods, correlation and comparative analyses have been used. The result of the study can be formulated in the following theses. Despite the acknowledged progress in digitalization of Russian banking sector, cross-sectional analysis does not reveal a significant relationship between the level of digitalization of Russian banks and the main indicators of their activities. The positive correlation can be traced in relation to the “number of active users” indicator. This result can be explained by the fact that 1) the relationship between the considered metrics is indirect, 2) the return on the innovative technologies used by banks has a delayed effect, 3) new strategies (for example, forming of ecosystems) direct banks’ investments to other fields beyond the banking sector and cause insignificant correlation of these investments with the indicators of the size of the loan portfolio or the volume of deposits.